November 12, 2020

Sagicor Group Jamaica (SJ)

Financial Statements for the Nine Months Ended September 30, 2020:

Sagicor Group Jamaica (SJ), for the nine months ended September 30, 2019 reported a 10% decrease total revenues to $60.24 billion from $67.51 billion in 2019, while for the third quarter total revenues were down 14% to total $21.39 billion compared to $24.92 billion in 2019. Total revenue for the nine months was broken down as follows:

• Net premium revenue increased by 10% to a total of $37.25 billion compared to $33.79 billion last year.
• Net investment income rose to $13.35 billion from $12.42 billion in 2019, a 7% increase.
• Fees and other revenue decreased 2% to $10.32 billion from $10.51 billion in 2019.
• Hotel Revenue stood at $1.85 billion for the period under review versus the $3.87 billion booked in 2019.

SJ noted, “Our results remain impacted by unrealized capital losses driven by the broad decline in bond and equity prices earlier in the year, travel restrictions’ effect on our investments in hotel operations and unrealized IFRS 9 Expected Credit Losses (ECL) on loan portfolios and investment securities. Despite these adverse effects, the operating cash flow of the company has increased by $2.62 billion and the Group continues to maintain strong liquidity, improving its cash position by $11.19 billion year on year.”

Benefits and expenses totalled $44.44 billion for the period, down 17% from $53.66 billion, while for the third quarter benefits and expenses were down 31% to close at $13.40 billion relative to $19.46 billion in 2019. Of this:

• Commission and related expenses grew by 10% to $4.65 billion from $4.24 billion in 2019.
• Administration expenses increased by 14% to $17.00 billion (2019: $14.89 billion).
• Net insurance benefits incurred amounted to $24.41 billion versus $21.18 billion that was recorded last year.
• Other taxes and levies totalled $746.75 million, a 16% increase relative to $641.76 million.
• Amortization of intangible assets rose 7% from $556.27 million in 2019 to $615.85 million.
• Hotel Expenses totalled $1.61 billion for the period under review.

Share of profit from joint venture amounted to $193.01 million relative to a share of loss of $8.63 million a year earlier. Share of loss from associate for the period totalled $3.40 billion compared to a profit of $680.05 million last year.

As such, Profit before Taxation amounted to $9.41 billion, a 35% decrease when compared to the $14.52 billion booked in 2019. For the quarter, profit before taxation closed at $6.39 billion (2019: $5.23 billion).

Investment and corporation taxes of $4.41 billion was reported for the period (2019: $3.22 billion), as such net profit for the nine months totalled $5 billion (2019: $11.30 billion), a 56% decline. Profit for the quarter amounted to $4.16 billion relative to $4.17 billion in 2019, a marginal decline of 0.42% year over year.

Net profit attributable to shareholders for the period amounted to $10.33 billion relative to $10.86 billion the prior year’s period. For the quarter, net profit attributable to shareholders increased 33% to $5.97 billion (2019: $4.47 billion).

Total comprehensive income for the period under review at $6.53 billion (2019: $19.33 billion), while for the quarter, total comprehensive income totalled $4.46 billion (2019: $6.57 billion).

Earnings per share for the quarter amounted to $1.529 (2019: $1.146), while EPS for the period totalled $2.645 relative to an EPS of $2.781 in 2019. The twelve-month trailing EPS amounted to $3.87. The total number of shares used in the calculations amounted to 3,905,634,918 units. SJ’s stock last traded on November 11, 2020 at $48.01.

In addition, SJ highlighted, “We continue to carefully monitor and assess the economic conditions. We remain committed to the health and wellness of our team, clients, and stakeholders by implementing a multidimensional approach to safeguard health, minimize risk and ensure business continuity. Sagicor Group Jamaica remains cautiously optimistic about the future but feels it prudent to take a conservative view of the potential impact of COVID-19 and manage our businesses accordingly.”

Balance Sheet Highlights:

Total Assets increased by 5% or $23.43 billion to close at $481.36 billion as at September 30, 2020 from $457.93 billion the year prior. The movement was attributed to a $8.50 billion increase in ‘Cash resources’, a $6.94 billion increase in ‘Loans & leases, after allowance for credit losses’ and $15.84 billion increase in ‘Pledged assets’ which closed at $33.02 billion (2019: $24.52 billion), $87.89 billion (2019:$ 80.96 billion) and $92.30 billion (2019: $76.47 billion) respectively. However, this was offset by 23% decline in ‘Investment in associated company’ ending the period at $20.51 billion (2019: $26.66 billion).

Equity attributable to stockholders of the company as at September 30, 2020 stood at $101.21 billion (2019: $88.38 billion) resulting in book value per share of $25.91 (2019: $22.63).

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